Billionaire tycoon in huge alleged fraud reportedly now living in Russia, out of reach of Israeli authorities

Lev Leviev at a gathering for Jews from Bukhara, Uzbekistan, held in Tel Aviv on January 13, 2013. (Yossi Zeliger/Flash90)

The son and brother of Russian-Israeli diamond billionaire and philanthropist Lev Leviev have been arrested in connection with a smuggling operation that brought hundreds of millions of shekels’ worth of diamonds into Israel hidden in suitcases.

Leviev himself is reportedly being sought by authorities for questioning over the case, which first broke into the open Monday, but he is refusing to return to Israel.

Zevulun and Moshe Leviev were among six suspects held on suspicion of smuggling. The pair had run a factory owned by Lev Leviev and the remaining four suspects held senior positions in his company. The remand of all six suspects was extended until Sunday by the Rishon Lezion Magistrate’s Court.

Police and Tax Authority officials also believe Leviev played a role in the sting, according to the Walla news website, which did not specify what he is suspected of.

Israel Hadashot news quoted sources close to the case Monday night as saying that Leviev is a central suspect in the case, and would be under arrest if he were in Israel, but is abroad and so out of the reach of Israeli authorities.

Associates of Leviev told Hadashot news that Leviev was refusing to return to Israel and would only agree to be questioned abroad.

According to Israel’s Channel 10 news, police are considering requesting his extradition from Russia, where he recently moved from London.

Police said in a statement earlier on Monday that it had arrested six suspects who had “conspired, planned, and operated for a number of years smuggling diamonds into the State of Israel worth hundreds of millions of shekels in violation of the law and without reporting to the competent authorities.”

They were questioned under caution on suspicion of diamond smuggling, money laundering, tax offenses and conspiracy to commit a crime, filing false business reports, and other offenses.

The investigation, being handled by the Lahav 433 national crime unit, found that an Israeli citizen who had been living aboard entered Israel six years ago with diamonds concealed in his luggage, police said.

Police believe one suspect, a worker at a Russian factory owned by Lev Leviev, then sold the diamonds without reporting the transactions to tax authorities. Investigators who raided his home and found hundreds of diamond-related shipping certificates.

More arrests in Israel and abroad are expected, according to authorities.

During raids on the suspects’ homes police seized luxury cars from a city only identified as near the Tel Aviv area.

All of the suspects were to be brought for a hearing later Monday at the Rishon Lezion Magistrate’s Court.

The case was cracked with the aid of one of the suspects who turned state witness after he was stopped six months ago at Israel’s Ben Gurion Airport carrying a diamond worth a million shekels ($270,000), the Globes website reported.

In a statement, Leviev’s company LLD Diamonds said it had no information about the arrests, according to the report.

“The company knows nothing of the events reported in the media,” the statement said. “Mr Leviev and the companies he owns operate according to the appropriate norms, and in compliance with the law. We hope that the matter will quickly be clarified and that the suspicions will turn out to be baseless.”

Born in the then-Soviet republic of Uzbekistan, Leviev moved to Israel at age 15 but has lived in London for much of the past decade. He is a major supporter of many Jewish causes, including Chabad-Lubavitch, the Hasidic sect that focuses on outreach to Jews around the world.

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